Inflation crept back up again last month, with prices now increasing at an annual rate of 5.1 per cent, as consumers felt the impact of higher oil prices, rising mortgage costs and higher costs for eating and drinking out.
The Central Statistics Office's Consumer Price Index (CPI) showed prices rose by 0.7 per cent in March, which tipped annual inflation over the 5 per cent mark, up from 4.8 per cent in February, but just shy of the six-year record high of 5.2 per cent recorded in January.
The 5.1 per cent rate was ahead of some economists' expectations.
Davy stockbrokers raised its inflation forecast for the year, after its measure of "core" inflation, which ignores volatile items such as mortgages, food and energy, increased to 2.9 per cent.
This was the fastest rate since December 2003.
Davy economist Rossa White said he now expected that the annual rate of inflation in 2007 would be 4.5 per cent rather than Davy's previous forecast of 4.2 per cent. The annual rate in 2006 was 4 per cent.
Ulster Bank economist Pat McArdle is forecasting an even higher rate of 4.75 per cent in 2007. Mr McArdle, who predicted the March increase, expects that the annual rate will once again reach 5.2 per cent in April, before falling off toward the end of the year.
Goodbody Stockbrokers stuck to its lower forecast of 3.8 per cent yesterday, but Deirdre Ryan of Goodbody's research department said there was a risk that the 2007 rate would eventually weigh in higher than this.
The Harmonised Index of Consumer Prices (HICP) annual rate of inflation, which excludes mortgage interest repayments and is the measure used across the euro area, was 2.9 per cent in March, up from 2.6 per cent the previous month.
This is 1 per cent ahead of the average HICP rate in euro zone.
The annual rate of Irish CPI inflation has so far averaged at 5 per cent in 2007, compared to an average rate of 3.3 per cent in the first three months of 2006.
The annual rate of inflation for services climbed to a high of 9.3 per cent, while goods increased by 0.4 per cent over the year.
Clothing and footwear were responsible for the highest monthly price increases, rising by 2.1 per cent in March, as retailers put their prices back up after the winter sales.
Transport prices rose by 1.6 per cent in the month, with increases for petrol, diesel and air fares, while mortgage interest repayments rose by 0.9 per cent.
Prices increased by 1 per cent in the restaurants and hotels category, while the cost of DIY materials also jumped.
Excluding mortgage interest costs, prices increased by 0.6 per cent in the month and by 2.7 per cent annually.
